India-U.S. deal paves the way for global trade pact

Food security deadlock resolved ahead of WTO meet

November 13, 2014 12:08 pm | Updated December 04, 2021 11:37 pm IST - New Delhi

Decks have been cleared for a possible global trade deal after India and the U.S agreed on the way forward to break the logjam in global trade negotiations. With the agreement in place, India is all set to move its proposal on food security before the WTO’s General Council at its next meeting scheduled for early December.

This proposal will seek to make open-ended the interim protection of a ‘peace clause’ that was agreed to at the Bali Ministerial last December.

The clause safeguards support prices for farmers against the WTO’s limits on agricultural subsidies. India was in danger of breaching these subsidy caps.

India wants to make sure that this protection would be available in perpetuity, should a permanent solution to the problem of the WTO agriculture subsidy caps not be found. Whether the Bali Declaration provides that the ‘peace clause’ could be available beyond 2017 was open to interpretation.

India’s right

Announcing that an agreement had been reached with the U.S, Minister of State for Commerce and Industry Nirmala Sitharaman said on Thursday that the U.S had agreed that India’s right to protect its right to food security cannot be denied by the WTO, paving the way for removing the imperfections in the Bali Ministerial package.

U.S Trade Representative Michael Froman also released a statement which said the agreement with India reflected shared understandings regarding the WTO’s work on food security.

Sources on the Indian side indicated that the resolution was possible after an understanding was reached with the U.S that India’s subsidies are not trade-distorting and aimed at achieving food security. India, on the other hand, was able to reassure the U.S that it was not opposed to trade facilitation and in fact was on course to implement it.

Clears way for TFAs

“The agreement announced today between the United States and India paves the way for full implementation of the WTO’s Trade Facilitation Agreement (TFA), the first multilateral trade agreement to be concluded in the history of the WTO,” the U.S statement on the India-U.S. agreement on food subsidies said on Thursday.

At the WTO’s Ministerial Conference held in Bali last December, all its members, including the U.S and India, had agreed to a package of measures including a TFA and a commitment to find a permanent solution to the problematic agricultural subsidy caps. India’s position is that the WTO’s farm subsidies need to be updated as they are benchmarked to food prices of the 1980s.

Efforts to put the TFA in place were dealt a setback in July, when India refused to ratify, it raising concerns over the unsatisfactory progress on the WTO’s work on food security issues. The U.S statement said that delay has now been overcome with the agreement with India in place for moving forward with the full implementation of the Bali package.

“We supported the Bali Package but when subsequent developments belied that hope, India had no option but to seek a course correction,” the India statement said. It also said that the impasse at the WTO was now likely to end, opening the way for implementation of the TFA.

“We are extremely happy that India and the U.S have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns,” the India statement said. The agreement will facilitate Prime Minister Narendra Modi’s bilateral meetings at the ongoing G-20 summit in Brisbane.

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